Penalty duplication in central excise rejected as remand scope was limited and separate penalties on proprietor and concern were unsustainable.

After remand, adjudication was confined to recomputation of duty and consequential penalty on clandestine removals, and the earlier valuation issue could not be reopened; the recomputation was upheld. A proprietary concern and its proprietor are not separate legal persons for penalty purposes, so separate penalties on both for the same business were unsustainable and were deleted. Where penalty under Section 11AC of the Central Excise Act had already been imposed, additional penalties under the Central Excise Rules required an independent justification; none was shown, so those rule-based penalties were quashed.

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Issues: (i) Whether, after remand, the adjudicating authority could restrict itself to recomputation of duty and penalty on the basis directed by the Tribunal; (ii) whether penalty could be imposed separately on a proprietary concern and its proprietor; (iii) whether penalty under other provisions of the Central Excise Rules was sustainable when penalty under Section 11AC of the Central Excise Act, 1944 had already been imposed.

Issue (i): Whether, after remand, the adjudicating authority could restrict itself to recomputation of duty and penalty on the basis directed by the Tribunal.

Analysis: The remand order had limited the adjudicating authority to determining the correct amount of duty payable on clandestine removals and the consequential penalty. The challenge to the valuation methodology could not be reopened at that stage because the earlier order had already settled the relevant principles and only the quantification issue survived. The Commissioner adopted the same valuation method for clandestinely removed goods as for duty-paid goods, in line with the remand direction.

Conclusion: The recomputation of duty and consequential penalty was upheld.

Issue (ii): Whether penalty could be imposed separately on a proprietary concern and its proprietor.

Analysis: A proprietary concern and its proprietor are not separate legal persons for the purpose of penalty. Separate penalties on both in respect of the same proprietary business amount to duplication and are not legally sustainable.

Conclusion: The separate penalties imposed on the proprietary concerns and their proprietors were set aside to that extent.

Issue (iii): Whether penalty under other provisions of the Central Excise Rules was sustainable when penalty under Section 11AC of the Central Excise Act, 1944 had already been imposed.

Analysis: Section 11AC provides for a penalty linked to the duty liability. The impugned order did not disclose any independent justification for imposing additional penalties under the Central Excise Rules where Section 11AC penalty had already been levied. In the absence of such justification, the additional rule-based penalties could not stand.

Conclusion: The penalties imposed under the Central Excise Rules were quashed.

Final Conclusion: The order was sustained on duty quantification but modified by deleting the duplicated penalties on proprietary concerns and the additional rule-based penalties, leaving the assessee only partly unsuccessful.

Ratio Decidendi: After remand, adjudication is confined to the scope directed by the appellate order, and penalty cannot be duplicated by separately proceeding against a proprietary concern and its proprietor or by imposing unsupported additional penalties beyond the statutory penalty already levied.

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